News Analysis – July 2016

General News Summary

Controversial Reshuffle

A government reshuffle in which politician Avigdor Lieberman, head of the Yisrael Beitenu party, was named defense minister sent shock waves through the Israeli political establishment. Lieberman replaced outgoing defense minister Moshe (Bogie) Ya’alon, a member of Prime Minister Netanyahu’s Likud party, in a move linked both to Netanyahu’s desire to add Yisrael Beitenu’s six seats to his razor-thin 61-seat majority in the 120-member Knesset and eroding relations with Ya’alon centered, among other things, on the way soldiers deal with perpetrators of terror acts. A few days after his removal from Defense, Ya’alon resigned both from the Knesset and the Likud, vowing to return to politics while seeking the national leadership.

One major point of dispute was Ya’alon’s unqualified support of Chief of Staff Gadi Eizenkot and the army after an incident in which an Israeli soldier shot and killed a Palestinian who had stabbed a soldier in the West Bank city of Hebron. While defending the IDF’s rules of engagement, including shooting to kill if attacked, Eizenkot said in the past, he “didn’t want soldiers to empty a magazine on a girl armed with scissors.” Although Netanyahu condemned the Hebron killing, he also expressed sympathy in a phone call to the shooter’s parents, saying that “as the parent of a soldier I share your distress.”

Ya’alon and Eizenkot faced a storm of criticism by part of the right-wing public, including politicians in Netanyahu’s Likud party and coalition partner Israeli Home for being excessively soft on perpetrators in the immediate aftermath to terror attacks.

About two weeks after the reshuffle, Netanyahu came under unprecedented attack from his two immediate past defense ministers, Ya’alon and his predecessor at Defense, former prime minister Ehud Barak, both of whom said it was “time to go” for Netanyahu.

Speaking at a policy conference in Herzliya, Barak accused Netanyahu of responsibility for the failures of his government. “Leaders around the world do not believe a word said by Netanyahu and his government,” Barak said. “Who in the name of God gave Netanyahu the authority to lead us to the edge of an abyss? Barak warned of Israel becoming Belfast, Bosnia, old Johannesburg, or Europe ahead of World War II. “If it looks like the sparks of fascism, walks like the sparks of fascism, and barks like the sparks of fascism, it is the sparks of fascism,” said Barak, mocking Netanyahu’s 2012 “nuclear duck” speech at the United Nations.

Ya’alon, in his first post-resignation public appearance, said he lacked faith in the incumbent prime minister. He belittled Netanyahu’s constant focus on the threat posed by Iran, saying that “the country’s leadership stop scaring the citizenry and stop giving them the feeling that we are standing before a second Holocaust.”

Netanyahu dismissed both former ministers’ comments as pure politics, noting that neither had raised his voice while inside the government.

Aid Negotiations

Israel and the US remain engaged in drawn-out talks to renegotiate American military aid, currently amounting to about $3B a year. Talks have been going on for more than a year, with no end in sight.

Various sources suggest that a deal could have been struck last year, in the aftermath of the nuclear agreement with Iran. They said that Prime Minister Benjamin Netanyahu made a major miscalculation by not doing so, apparently in the expectation that Israel might get a better deal by waiting till after the US presidential elections. As that expectation has receded, the terms offered by the Obama administration appear less favorable than they were a year ago.

The administration is still offering more than the $3B Israel has been receiving annually over the past decade. According to press reports, the US is proposing about $37.5B over 10 years, compared to the $40B requested by Israel. Both sums are substantially lower than the up to $5B a year Israel might have received by striking a deal last year.

Washington seeks to reduce the 26.4% portion of its aid that Israel has been allowed to convert from dollars to shekels which were then spent on military equipment from Israeli companies rather than purchasing American military goods, effectively subsidizing Israeli defense contractors at the expense of American defense manufacturers.

The administration also wants to package aid given for defensive missile systems, including development of Israel’s Arrow, Iron Dome and Magic Wand to be part of the general military aid package, rather than in separate appropriations negotiated by the White House and Congress. Such an arrangement, the Americans argue, guarantees funding for the missile projects. On the other hand, Israeli sources note “automatic” missile funding would substantially erode the leverage Israel gets from Congress.

Quartet Report

A long-anticipated report by the Quartet – the US, UN, EU and Russia dealing with the Middle East – has criticized both Palestinian incitement against Israel and Israeli “hate crimes” against Palestinians, while criticizing expansion of Israeli settlements.

Prime Minister Netanyahu’s office welcomed some parts of the report, but said it “perpetuates the myth that Israeli construction in the West Bank is an obstacle to peace.”

Israeli sources were encouraged by the report’s mention of the Palestinian leadership’s failure to condemn – or by implication its tacit consent to – Palestinian glorification of those who commit acts of terrorism against Israelis as heroes.

Earlier, Israeli had expressed satisfaction at the generally mild report issued by the early-June conference in Paris, called by French President Hollande in an effort to revive the stalled Arab-Israeli peace process. Israel did not participate in the one-day meeting, which was not attended by the foreign ministers of Germany, Russia and Britain.

The deal, signed in late June, has drawn strong opposition from families of Israeli soldiers killed in action in the Gaza Strip, whose bodies have not been returned by the Strip’s Hamas rulers. Some ministers who voted for the deal said they were convinced that Turkey simply was not able to make Hamas return the bodies, or to release Avraham Mengistu, an Israeli held captive in the Strip.

As might be expected, the deal was interpreted differently by both sides. Turkish President Recep Tayyeb Erdogan said that all his country’s demands had been accepted, while Israeli Prime Minister Benjamin Netanyahu called the deal an immense boost to the Israeli economy and is a major step towards restoring stability to the Middle East. According to a report in Globes, industry sources expect Israel to sign a gas deal with Turkey this year or in 2017, for delivery of natural gas from one of Israel’s offshore gas fields due to begin by 2020.The agreement renormalizes diplomatic relations between the two countries and ostensibly ends the crisis that erupted following the death of nine Turkish activists during a raid by Israeli commandos on the Mavi Marmara, which tried to force itself to the Gaza Strip in May 2010. It includes a Turkish pledge to prevent anti-Israel terrorist activity from being launched or controlled within its borders, a cancellation of all claims stemming from the Mavi Marmara incident, and waiver of Ankara’s demand that Israel’s naval blockade of Gaza be lifted in its entirety. Israel, for its part, promised that Turkish aid to Gaza could be transshipped through Israel’s Ashdod port, and to enable Turkey to build a power station, a hospital and a salt water desalination plant in the Strip, all subject to Israeli security regulation.

Restoration of the close security and intelligence cooperation that existed between the countries and particularly mutual trust and confidence would take time, several sources indicated. “Defense isn’t an all expenses included vacation package at a club in Antalya. It will take time before we get back to the intimacy that characterized the relations between Turkish and Israeli companies, and between the Turkish and Israeli governments,” a source told Globes.

Hizballah Upgraded

After six years of fighting in the Syrian civil war, the Lebanese Shi’ite Hizballah has been transformed from a terrorist-style militia into an army, says veteran Middle East analyst Avi Issacharoff. Writing in the Times of Israel online newspaper, Issacharoff notes that Hizballah has suffered heavy casualties while fighting to preserve the regime of Syrian President Bashar al-Assad, the ally of the Shi’ite group’s Iranian sponsor. Operating alongside the Russians in many cases, Hizballah has enhanced its command and control capabilities, become more skillful in anti-tank, rocketry and artillery, developed networks of unmanned aerial vehicles while gaining considerable experience in conventional, as opposed to irregular, militia-style, military operations. All this despite heavy losses, estimated at about 1,500 fighters killed and 6-7,000 wounded, amounting to about a third of its fighting force. Issacharoff notes that Hizballah remains focused on the Syrian conflict and does not appear to pose an immediate threat to Israel, at least for the time being.

Big Money for Israeli Footballer

Israeli footballers have been on the rosters of some of Europe’s best football clubs, but the sale of Maccabi Tel Aviv star Eran Zahavi, 28, for $12.5M is the highest sum, by far, ever paid for an Israeli. That’s what Chinese club Guangzhou is laying out for 30 months-worth of Zahavi’s services, including Zahavi’s salary and an $8M transfer fee to Maccabi itself.

The Economy

Gas Deal Reworked

A revised version of the deal with the developers of Israel’s offshore natural gas fields has been reworked, after a previous version of the agreement was struck down by the Supreme Court. The new version replaces the “stability clause” forbidding subsequent governments from changing the arrangement for a period of 10 years with one that would compensate the fields’ operators, led by Noble Energy of the US and Israeli tycoon Yitzhak Tshuva’s Delek group, for any changes made by a future government.

More Undersea Gas?

Offshore Israeli natural gas fields amounting to four more Leviathan fields are still undiscovered, according to Minister of National Infrastructures, Energy and Water Resources Yuval Steinitz. Steinitz told a major security conference that his ministry estimates that there are still about 2.2 billion cubic meters of gas still to be discovered in Israeli economic waters. “That’s about double what we have discovered to date and four gas fields like Leviathan,” the minister said.

Pipeline Bidders

Seventeen companies have submitted bids to build and operate the planned Israeli-Jordanian joint project to build a water pipeline between the Red and Dead seas. According to a report in Globes, the bidders for the $800M project include three Chinese companies, as well as a number of firms and consortia from Israel and Europe.

Jordan and Israel signed a letter of intent to build the project, which is designed to halt the lowering level of the inland salt lake, in late 2013. Work on the first pipeline to pipe water from the Red Sea northwards and pass through Jordanian territory is expected to take three years. Some of the Red Sea water will go to a Jordanian desalination plant in Aqaba, which will supply water to southern regions of both countries. In exchange for the Aqaba water, Israel has committed to supply Jordan with fresh water from Lake Kinneret.

Delegation from India

A delegation from NASSC, the Indian national organization for IT and services led by organization president R. Chandrashekar, visited Israel for three days in early June to explore possible cooperation with Israeli high-tech companies. The visit reflects a growing tendency of Israeli companies to look to Asia and the Far East rather than exclusively seek partnerships with European and North American tech companies.

Estimate Raised

Israel’s Central Bureau of Statistics has raised its estimate of first-quarter economic growth from an original 0.8% to 1.3%. The economy grew by 3.4% in the fourth quarter of 2015.

Meanwhile, Finance Ministry chief economist Yoav Naveh said that Israeli exports fell by 10% between December 2015 and April 2016, a continuation of the trend that has been evident for almost two years. Noting that recent exports averaged $3.5B a month, the lowest figure since 2010.

Bottlers Attack Health Ministry Campaign

Bottling industry figures have come out strongly against a new Health Ministry campaign designed to discourage the consumption of sugared drinks. Senior figures claim the ministry is misleading the public about the causes of obesity in Israel, particularly the ministry’s claim that 43% of daily sugar input comes from such drinks.

Contacts Barred

In his capacity as acting communications minister, Prime Minister Benjamin Netanyahu has been prohibited from dealing with matters connected with the Bezeq telecommunications company and other firms controlled by his friend, businessman Shaul Elovich. A ruling by Attorney General Avichai Mandelblit also covers the Pelephone mobile company, the Walla Internet portal, SpacecomSatellite Communications and the Eurocom group. Mandelblit’s ruling stipulates that Netanyahu, whose office says he has been friendly with Elovich for almost two decades, must hand over ministerial responsibility for matters affecting these firms to someone else.

Artificial Islands

The municipal government of Herzliya, north of Tel Aviv, reportedly intends to commission a study on the feasibility of building artificial islands along Israel’s coast. The study will cover possible construction of two islands, one for housing and the other for an airport accommodating domestic flights. At the same time, Tel Aviv has been looking into the possibility of building an international airport on a different artificial island.

Suing Facebook

An Israeli court has approved a class-action suit against Facebook for violating users’ privacy, ruling that a clause in Facebook’s terms of use requiring all suits to be heard in California courts is invalid. The $400M suit, filed in the Central District Court by Ohad Ben Hamo, argued that Facebook violates users’ privacy by using their private posts to determine which advertisements they should see, without obtaining their knowing consent to this policy. The suit also accused Facebook of violating Israeli law by not registering its database in the national database registry.

Finance & Investment

Financing Spurt

Israeli start-ups raised $356M in the first half of June. Highlights included $50M raised by website guide developer WalkMe and $40M raised by Trax, a retail image-recognition firm.

VW Invests in Gett

Volkswagen, the German automaker, has invested $300M in Israeli taxi-hailing firm Gett (formerly Get Taxi). The investment, which will allow Volkswagen to expand on-demand mobility services in Europe, parallels a Toyota investment in Uber and General Motors‘ $500M investment in ride-sharing app Lyft. Under the plan, Gett drivers will be offered discounted VW cars for their taxis.

Finance Institutions May Be Sold

New regulations are likely to force the sale of several major Israeli financial services institutions in the next few years, but according to a report in Haaretz, it’s not clear who’s going to be able to buy them. These include the Isracard and Leumicard credit card companies, after a ruling that their current owners Bank Hapoalim and Bank Leumi must give up their 51% respective shares in order to enhance consumer credit competition.

Under the Business Concentration Law, big Israeli institutional investors are barred from buying the credit card issuers or control of the Mizrahi Tefahot and First International banks, a large bloc of Bank Hapoalim stock and the Clal and Phoenix insurance companies due be sold in the next few years. Other rules bar cross-holding between big financial groups and other large Israeli business groups.

Debt Deal

Bank Leumi and Eliezer Fishman have agreed on the sale of hundreds of millions of shekels of the struggling businessman’s assets to help repay 1.8B shekels ($470M) in private debt he owes the bank. The assets include real estate Fishman used as collateral on loans he has been unable to repay.

Gates Investment

A firm in which Bill Gates is an investor has taken a stake in Xelerator, a new technology incubator for developing medical devices. According to a report in Globes, Intellecectual Venture, in which Microsoft billionaire Gates has a stake, has a share in an eight-year commitment to put a total of $65M into Xelerator; the other partners are Israel’s Sheba Medical Center and Boston Scientific.

Mergers & Acquisitions

NICE-InCcontact

Business customer-software service firm NICE Systems, based in the high-tech belt northeast of Tel Aviv, has signed a definitive agreement to acquire inContact, a Paramus, New Jersey-based provider of cloud contact optimization tools for call centers. Purchase price is $940M.

FIMI-Beit Shemesh Engines

FIMI Opportunity Funds, Israel’s largest private equity firm controlled by businessman Ishai Davidi, has purchased 42% of Beit Shemesh Engines from Clal Industries. Purchase price is NIS 125M (about $34M). Founded by the government in 1968 and privatized in 1992, Beit Shemesh Engines produces parts, assembles and renovates jet engines. Though its original output was designated for military use, most of the company’s business is now in the civilian sectors, to customers including GE and Pratt & Whitney, as well as the Israel Defense Ministry.

Broadcom-Magnacom

Broadcom, the semiconductor connectivity giant based in San Jose, California and Singapore, has purchased Israel’s MagnaCom for a reported $60M. It is the 13th Israeli acquisition for Broadcom, which has a market cap of over $50B and 8,000 employees worldwide..

The main product of MagnaCom, based in Petah Tikva east of Tel Aviv, is WAM, modulation technology which can reduce spectrum congestion and relieve growing demand for more bandwidth.

Salesforce-Implisit

San Francisco-based Salesforce, a leading cloud-computing specialist, has purchased Israeli data-automation startup ImplisitInsights for a reported tens of millions of dollars. Implisit’s software helps sales people make faster and better decisions based on the data stored in its customer database, possibly predicting the best possible deals and identifying the most risky while recommending actions to improve the sales process. According to a report on the Business Insider website, Implisit’s founders have “interesting” backgrounds: Elad Donsky, now chief technical officer, started college at the age of 15 while Gilad Raichshtain, the current CEO, was Intel’s youngest engineer when he started work at the chipmaker when he was 16.

Financial terms of the deal, IBM’s 14th Israeli acquisition, were not announced. The most recent was Trusteer, for $600M in 2013. In addition to Israel, EZSource, founded in 2003, has offices in the US, UK, Switzerland, Japan and Romania. Its clients include ING Life, Maybank and 7-Eleven.

HIL-Nanolabz

HIL Applied Medical, an Israeli developer of laser-accelerated proton beams for medical purposes, has acquired Nanolabz of the US. Value of the deal was not reported, although Globes noted that both companies are very small. Proton beams are used for the treatment of cancer.

HIL Applied Medical was founded on the basis of research by director Dr. Shmuel Eisenmann and chief scientist Prof. Arie Zigler at the Hebrew University of Jerusalem. Its main investors are the Integra Holdings fund, founded by Yissum Research Development Company, private investors and mass funding through the OurCrowd crowdsourcing platform.

Green Lantern-Gad Dairy

The Green Lantern investment firm has purchased a 49% stake in Gad Dairy, Israel’s fourth largest dairy producer, at a company value of about $300M. Founded in 1980, Gad Dairy is a family company that specializes in cheeses from cow’s milk, adding goat milk cheeses in recent years.

EFI-Optitex

Electronics for Imaging has acquired Optitex, a privately held Israeli producer of 3D design software for the textile industry. Purchase price for Optitex, based in Petah Tikva east of Tel Aviv, was $52M. Based in California’s Silicon Valley, EFI is a world player in the digital printing industry. EFI was founded in the late 1980s by the late Efi Arazi, who previously founded Scitex, an Israeli pioneer in the digital imaging field.

Accenture-Maglan

Dublin-based Accenture, the world’s largest consulting firm, has acquired Maglan, an Israeli firm specializing in offensive cyber simulation, countermeasures to vulnerability, cyber forensic and malware defenses, in addition to information technology R&D focusing on intelligence. Financial terms were not announced. Announcement of the purchase coincided with the opening of Accenture’s new cybersecurity R&D lab in Israel.

Ambus-ETView

Ambus, a Danish medical device company, has purchased Israel’s ETView for about $16M. ETView, based in Misgav in the Galilee, has developed a device that improves the way respirator tubes are inserted into the breathing passages using a camera that views inside the lung when the tube is inserted. The product was developed at the incubator of Trendlines, which is a major shareholder in ETView together with the Migdal insurance company.

Cisco-Cloudlock

Cisco Systems, the California-based global networking giant, has acquired CloudLock, a Masachusetts-based developer of technology that monitors the use of shared information in company networks, for $297M. CloudLock, founded by Israelis, has a development center in Israel.

Cisco has invested more than $2B in Israeli companies over the past 20 years. Its latest acquisition, prior to CloudLoack, was Leaba Systems of Caesarea, bought for $32M at the start of 2016.

Iron Source-Streamrail

IronSource, a Tel Aviv and US-based developer of tools to help mobile app developers distribute and profit from their apps, has acquired Tel Aviv-based StreamRail. No figure was announced, but the price is estimated to be in seven figures. Founded in 2014, StreamRail has developed video-player technology that enables publishers to make money off content.

Dentsply-MIS

Dentsply Sirona of the US, the world’s largest supplier of professional dental materials and technology, has signed an agreement to acquire Israeli dental implant systems manufacturer MIS Implants Technologies Ltd. for $375M. Privately held MIS Implants (the MIS stands for Make It Simple) is an Israeli company with headquarters in Savion, east of Tel Aviv. With annual sales of about $80M, it markets its products in over 60 countries.

Magic-Roshtov

Magic Software, a member of the Formula Systems group, has acquired Roshtov Software Industries, a developer of patient-management software for large health providers, for NIS 135M ($35M). The sale price represents a 30% premium over the NIS 104M valuation when the founders of Roshtov, based in the Beersheba suburb of Omer, delisted their company four years ago.

Doodle-Meekan

Online scheduling developer Doodle of Switzerland has purchased Meekan of Tel Aviv. Sale price was not announced. Meekan has developed a chatbox that acts as a virtual scheduling assistant. Meekan, whose name is drawn from the Hebrew “who’s here,” was founded in 2013.

Kardan Sells UMI Stake

Kardan Israel is selling its 46.1% stake in UMI (Universal Motors Israel) to the Einy family. The price, NIS 397M, is based on a company value of NIS 862M. After the sale, Einy family will own 96.1% of UMI, the importer and marketer of General Motors Cadillac and Chevrolet and Isuzu vehicles to Israel. Avihu Ben-Nun, the former commander of the Israel Air Force, still owns the other 3.9% of UMI.

Alvarion Remnant Sold

SuperCom, based in Herzliya, has purchased the remnants of former networking giant Alvarion for about $2M. At its peak Alvarion, which produced wireless communications systems, had a market cap of nearly $1B. Unable to service its debt, the company entered receivership three years ago.

Delta Galil Buys Prestige Brands

Israeli textile manufacturer Delta Galil has purchased several premium brands, 7 For All Mankind, Splendid and Ella Moss, from VF Corporation for $120M. The new brands, sold mostly in the US, are expected to add $300M annually to the Israeli firm’s revenues.

Science & High Technology

Mobileye Teams with BMW, Intel

Mobileye, the Jerusalem-based driving safety specialist, is teaming with BMW and Intel to produce self-driving automobiles based on BMW’s iNEXT series. The goal is to develop vehicles that can operate not only on the highway, but in city traffic as well.

IAI’s Rescue System

Res-Q-Cell, a new cellular search-and-rescue system just introduced by Israel Aerospace Industries, is designed to detect survivors in disaster areas, using survivors’ cellular devices to speed up locating and rescuing them. Res-Q-Cell supports world-wide cellular networks (GSM, UMTS, LTE), activating all cellular phones in the disaster area and quickly identifying and accurately locating mobile devices. The system can differentiate between those who are trapped and others. It detects mobile phones within a predefined wreckage area, identifies the mobile phones, and provides highly accurate 3-dimensional dual axis geo-location of survivors.

Renault Venture

French automaker Renault is collaborating with Tel Aviv University in a new to promote technical innovation in the auto industry. Other partners in the TAU Center for Innovation in Transportation include Carasso Motors, which imports Renault vehicles to Israel, and the Alternative Fuels Administration, part of the Prime Minister’s Office.

‘Turning Point for Digital Printing’

The recent Drupa trade fair in Germany marked a turning point for digital printing, according to Benny Landa, whose Landa Digital Printing, recorded $450M in new orders during the event.

Landa, a pioneer in digital printing more than two decades ago with Indigo, his first company, said: “In the past, digital printing vendors had to try to convince the market that digital is the way to go. Previously it was a ‘push’ selling motion. Now, for the first time, the situation has reversed. There is a very strong ‘pull’ from the market, driven by both customers and brand-owners, who are now demanding digital printing. It seems that the market leaders, in packaging, commercial printing and publishing have come to the realization that they simply must go digital.”

Two other Israeli companies were prominent at Drupa: Highcon, specializing in foldable packaging and 3D printing, in which Landa’s Landa Ventures owns a 25% stake, and Scodix, which adds finishing touches like metallic shine, polishing and other extras to digitally printed material.

Hospital Infections

Nano Textiles, based in Ramat Gan, claims to have developed revolutionary technology that transforms any fabric to one that kills and permanently prevents the growth of bacteria by embedding nano-particles of zinc oxide. The technology was developed at Bar-Ilan University and licensed under an agreement with the Israeli institution’s technology transfer subsidiary.

Microsoft’s Third Center

Microsoft has opened its third R&D center in Israel. The new center, in Nazareth, joins existing centers in Herzliya and Haifa. The software giant’s first R&D center outside the US was opened in Israel in 1991. Some of Microsoft’s most innovative technologies, including some components of IBM Watson, its flagship artificial intelligence technology, have been developed it the Israeli centers.

Border Area Incubator

A number of Israeli and foreign investors are setting up a technology incubator near Israel’s border with the Gaza Strip. The incubator, called SouthUp, will develop new projects in cleantech, agrotech, homeland security and other fields. Due to open in September, SouthUp is sponsored by the Sapir regional college, the Shaar Hanegev regional council, private Israeli and foreign Jewish investors and public institutions.

At about the same time Mellanox, an Israeli developer of big-data software, has gone a step farther by announcing that it will begin hiring programmers from the Gaza Strip itself. Mellanox already employs programmers from the Palestinian Authority cities of Nablus and Ramallah.

Solar Bid

Brenmiller Energy, an Israeli developer of solar energy-storage systems and Isolux of Spain are cooperating in a joint bid to set up a 150-MW solar energy station in South Africa. Brenmiller, whose founder Avi Brenmiller formerly headed Beit Shemesh-based Solel Solar Energy Systems, has developed a system for storing solar-generated energy at night, apparently overcoming what has been a major obstacle to widespread development of solar-generated energy systems.

Aerospace & Defense

No Buyers

Despite its outstanding success intercepting rocket attacks from Gaza during 2014’s Operation Protective Edge, Israel’s Iron Dome anti-missile system has not registered a single overseas sale. A number of foreign countries, among them Singapore, South Korea, India and some Persian Gulf states, reportedly have expressed interest in the system, developed by Rafael Advanced Defense Technologies, which has registered about 1,500 successful interceptions and a 90% success rate. According to a report in Globes, there have been no buyers mostly because no other country has been subjected to constant rocket fire on Israel’s level.

US Opts for Iron Fist

Government-owned Israel Military Industries will provide the US Army with a new version of its Iron Fist Active Protection System (APS) in the coming years. IMI says Iron Fist will be an element in the estimated $250M Modular Active Protection System (MAPS) program, which includes cooperation between IMI and General Dynamics, in whose US plants some components of the system will be produced. Iron Fist, also known as Trophy, has been deployed on Israel Defense Forces armored vehicles. It was developed in the aftermath of the 2006 Second Lebanon War, when IDF Merkava tanks and armored personnel carriers were heavily damaged by anti-tank missiles and RPG rocket-propelled grenades. As part of the program, US defense contractors Raytheon and Lockheed Martin will develop new software and computers for the Israeli-developed system.At the same time, IMI has registered several significant sales abroad. Largest is a $400M contract, together with DRS of the US, to supply assault bridge delivery systems to be mounted on the US Army’s Abrams tanks. There is also a provision to extend the multi-year deal. IMI has also sold $6M worth of decoy flares to the US Army’s Special Forces and is cooperating with Raytheon in a $100M contract to develop a precision mortar shell for the US Marine Corps.

Improved Grenade Pouch

Nir Shaul, seriously wounded 20 years ago when he was unable to extract a live grenade from its pouch during an IDF anti-terror operation, has developed a new pouch which substantially increases safety. The pouch enables fighters to pull out and throw a grenade with one hand, leaving the other hand free. The new pouch cancels the fear of having the safety catch caught in the laces of the soldier’s protective vest and of damage to the grenade’s lever during battle.

Maritime Defense

The Israel Defense Forces has tested a seaborne version of its Iron Dome missile defense system, apparently earmarked for the protection of Israel’s offshore oil fields. According to the Israel Today newspaper, the system tested in mid-May will be mounted on Israel Navy missile boats.

The Last Storm

The last Sufa-4 (Storm), a Jeep-Wrangler derivative, is due to roll off the production line at Nazareth Illit-based Automotive Industries next January, ending 66 years in which the Israeli automaker has produced vehicles. According to Yediot Aharonot, the company, which in the past has made Ford Escort and Transit vehicles, will continue to produce buses and armored vehicles for the IDF.

Elbit’s European Order

Elbit Systems, Israel’s largest private defense contractor, has been awarded a $40M contract for advanced tactical communications from an unnamed European country. The systems, which are due to be delivered over the next year, enhance voice, data and video communications between soldiers on foot and tactical vehicles.

Privatization to Resume

The Finance Ministry and the Government Companies Authority have decided to resume the process of privatizing government-owned Israel Military Industries. The process was suspended in March, after disclosures that a firm retained by the GCA to conduct a valuation of IMI had also been a consultant for a subsidiary of Elbit Systems, the leading bidder in the IMI tender.

Prometheus, the consultancy firm, reported the possible conflict of interest to the government. After consultations, Finance Ministry and GCA officials decided that the tender could proceed, but that a third company would be called in to conduct an additional valuation.

New Copters

The Israel Police will receive the first two of four new helicopters by the end of 2016, according to a report in Israel Today. The helicopters, made by the European Airbus concern, are being purchased and maintained for the police in a 20-year contract by Elbit Systems, under a PFI (private financing initiative) arrangement. The four helicopters – two single-engines H125 model and four larger H145s – are being built at the Airbus US plant in Columbus, Missouri.

Adam Takes Over as D-G

Reserve general Udi Adam assumed his new post as director-general of the Defense Ministry on May 27. Adam, who was a director at Israel Military Industries, replaces reserve general Dan Harel, who held the post for three years.

IAI’s Maor Resigning

Israel Aerospace Industries chairman Rafi Maor announced his resignation in late May. Maor, who will leave his post at the government-owned defense contractor in September, is close to Moshe (Bogie) Ya’alon, the former defense minister.Uvision Teams With Giant

Uvision, based in Zur Yigal in central Israel, has teamed with US defense contractor Raytheon to produce a lightweight version of the Israeli firm’s Hero 30 unmanned aerial vehicle for the US Army. Hero 30 is a 3 kg manpack-portable canister-launched tactical system with a 0.5 kg warhead, a line-of-sight datalink range of between 5-40 km, and a maximum operational endurance of 30 minutes. Powered by an electric motor, Hero 30 is capable of speeds of up to 100 knots and is ideal for anti-personnel missions. The UAV can be carried in a canister and launched from pneumatic compressed-air tube.

New Commander

Brig.-Gen. Amir Abulafia has replaced Brig.-Gen. Nadav Padan as commander of the Israel Defense Forces 162nd Armor Division, popularly known as the Steel Formation. Padan is expected to be promoted to major general and given command of the IDF’s Computer Service Directorate.

Italian Copters Eyed

The Defense Ministry is considering acquisition of new training helicopters from AugustaWestland of Italy, to replace Bell Sayfan 206s currently used to train cadets. The first Sayfans arrived in Israel in the early 1970s and were augmented in the following decade by other Bell helicopters. In recent years, the helicopters underwent a series of adaptations for use in training cadet pilots in the air force flight school at Hatzerim base.

The Defense Ministry is still considering which AgustaWestland model is most suitable for training future Air Force helicopter pilots.

IAI’s New Robot

Israel Aerospace Industries has unveiled RoBattle, a new and highly maneuverable combat and battle support system designed to be integrated with tactical forces and capable of carrying out a wide range of independent missions including reconnaissance, intelligence surveillance, convoy protection and independent attack.RoBattle’s modular robotic kit includes capabilities for vehicle control, navigation, RT mapping and autonomy, sensors and mission payloads. The system can be operated autonomously in several levels and configured with wheels or tracks, and fitted with different payloads and systems. The new system bears certain similarities to Guardium, an unmanned ground vehicle developed by a joint subsidiary of IAI and private defense contractor Elbit Systems. The subsidiary, G-nius, was closed down in April due to what was described as low interest in unmanned ground systems.

Killer Robot

General Robotis, based in Beit Nehemia south of Tel Aviv, has introduced Dogo, a killer robot with a built-in Glock automatic weapon. According to a report in Defense News, Dogo, named after an Argentine attack dog, has 360-degree vision capability and can work alone or in packs on missions, including entry into high-risk structures and bunkers. Most other robot systems are platforms onto which munitions and other systems can be mounted; Dogo is different in that its basic attack system, the Glock, is an integral part of it from the outset.

Defense Sales Applications

The Defense Ministry’s Defense Export Control Agency (DECA) received about 40,000 for sale of defense products to foreign countries last year, 40% of which concerned non-classified products. Under ministry regulations, non-classified defense products can be sold to 98 countries without obtaining a license in advance.

UAV Production

Government-owned Israel Aerospace Industries has begun serial production of Bird Eye 650D, its small tactical unmanned aerial system for military and paramilitary intelligence, surveillance and recon. The UAV is capable of autonomous missions of up to 150 km and can stay aloft for up to 15 hours. According to IAI, possible commercial applications of the 650D include monitoring energy distribution lines, rapid surveillance of disaster lines and mapping.

German Deal

The German Army plans to lease five Heron unmanned aerial vehicles from Israel Aerospace Industries for about $600M. According to press reports, the German chief of staff, who visited Israel recently, preferred the Heron to the US-made Predator and Raptor UAVs. German press reports indicate that the Heron can carry and launch armaments, including bombs and missiles, and are used in this way by Israel. Ron Ben Ishai, the veteran defense commentator of Yediot Aharonot, says it’s the first Israeli public acknowledgment that the Israel Air Force uses UAVs to launch munitions.

USV Fires Torpedo

Seagull, the unmanned surface vessel manufactured by Israel’s Elbit Systems, recently fired a torpedo – reportedly the first time that munitions has been launched from an autonomous USV in a trial held off the Israeli coast near Haifa. Seagull is designed for unmanned missions at sea, including counter-mine operations and protection of offshore oil and gas drilling platforms.

Barak 8 Land Trial Successful

Israel Aerospace Industries and the Indian Ministry of Defense’s R&D arm have conducted two successful tests of IAI’s Barak 8 surface-to-air missile in a land warfare scenario. The tests took place in the Bay of Bengal area, while previous tests were launched from warships. Delivery of the system, which uses advanced radar made by IAI subsidiary Elta Systems and missile components from Rafael Advanced Defense Systems and assembled by India’s Bharat Dynamics, has already begun. The system has already been deployed on Israel Navy Sa’ar vessels.